Monthly Archive: November 2016

English Grammar Video 1,024

English Grammar Video

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What is Investment ? 1,086

What is Investment ?

An investment is a benefit or item that is purchased with the hope that it will generate income or will appreciate in the future. In an economic sense, an investment is the purchase of supplies that are not consumed today but are used in the future to create assets. In finance, an...

Tenses Notes 1,525

Tenses Notes

Tenses are help to speak English Language. They are of great use and importance in both ways of communication, verbal and Written. English language is necessary for the people of all professions. The concept of English verb tenses is very important in establishing effective communication. The word, tense, has been...

EVALUATION OF PORTFOLIO PERFORMANCE 1,001

EVALUATION OF PORTFOLIO PERFORMANCE

1. The two major factors would be: (1) attempt to derive risk-adjusted returns that exceed a naive buy-and-hold policy and (2) completely diversify – i.e., eliminated all unsystematic risk from the portfolio. A portfolio manager can do one or both of two things to derive superior risk-adjusted returns. The first...

PROFESSIONAL ASSET MANAGEMENT 1,744

PROFESSIONAL ASSET MANAGEMENT

1. Private management and advisory firms typically develop a personal relationship with their clients, getting to know the specific investment objectives and constraints of each. The collection of assets held can then be tailored to the special needs of the client. Conversely, a mutual fund offers a general solution to...

SWAP CONTRACTS, CONVERTIBLE SECURITIES, AND OTHER EMBEDDED DERIVATIVES 1,951

SWAP CONTRACTS, CONVERTIBLE SECURITIES, AND OTHER EMBEDDED DERIVATIVES

1. CFA Examination III (1994) l(a). An interest rate swap is a customized risk management vehicle. In a pension portfolio (i.e., investment) context, an interest rate swap would be represented by an agreement between two parties to exchange a series of interest money cash flows for a certain period of...

OPTION CONTRACTS 853

OPTION CONTRACTS

1. A long straddle consists of a long call and a long put on the same stock and profits from dramatic price movement by the stock. A short straddle involves the sale of a call and a put on the same stock and profits from little or no stock price...

FORWARD AND FUTURES CONTRACTS 2,274

FORWARD AND FUTURES CONTRACTS

1. There are many different reasons some futures contracts succeed and some fail, but the most important is demand. If people need a particular contract to expose themselves to or hedge a price risk, then the contract will succeed. Most people use Treasury bond futures to gain exposure to or...

AN INTRODUCTION TO DERIVATIVE MARKETS AND SECURITIES 535

AN INTRODUCTION TO DERIVATIVE MARKETS AND SECURITIES

1. Since call values are positively related to stock prices while put values are negatively related, any action that causes a decline in stock price (e.g., a dividend) will have a differential impact on calls and puts. Specifically, an impending dividend will boost put values and depress call values. Another...

BOND PORTFOLIO MANAGEMENT STRATEGIES 1,676

BOND PORTFOLIO MANAGEMENT STRATEGIES

1. An indexing portfolio strategy is one in which the investor selects a bond portfolio that matches the performance of some bond-market index. The basic justification for this strategy is that many empirical studies have shown that portfolio managers on average can’t match the risk-return performance in the bond market...